Wednesday, November 26, 2014

At the core of my IMTFI-based investigation were the cash
experiments I conducted with market vendors in the Chivay market in Peru, as I
began describing in my previous post. I have been longitudinally tracking
fifteen of these market vendors over the course of a year. Fourteen of them are
women, and one is a man. With each, I have routinely purchased inexpensive items
with a 50 or 100-sol bill; as vendors decided on various strategies for
completing (or calling off) each purchase and making change, I interviewed
them, asking them to describe what they were doing as they took the
intermediate steps to make change. In addition to the tie-forging and
strengthening effects I found to be an immediate result of a vendor’s making
change by drawing on one’s market vendor colleagues, I also learned that many
vendors would earmark big bills “for savings” and larger expenses, as Reina
told me. They are reserved for the “bolsa familiar,” or diverted toward large
purchases like painting the house or supporting her daughter’s university
education. Making change, furthermore, is an obligation when one is able: the
few vendors in the market who refuse to do this lose later opportunities for
help from their neighbors with making change and offering supplies when
something runs out.

Big bills, as other vendors told me, tended to enter the market and circulate at much higher rates when the Colca Valley became a popular site for mainstream tourism, which began over the last two decades in the wake of major infrastructure projects in Colca and Peru’s national reopening to the world following decades of internal violence. The place has found an increasingly prominent place on the tourist map over the past fifteen years, as attractive for the beauty of its canyon as for the living Collagua and Cabana culture (two local ethnicities that date back to the years before Inca rule) its people are putting on display. Thus, the presence of big bills might even be seen as an indicator of the effort by municipalities and non-governmental organizations in the region to revalorize indigenous culture and, more generally, of the region’s increasing inclusion in national and transnational economic networks.

Making change at Brígida's breakfast stand. Photo by author.

I also compared the market scene with two other case study sites for
observing the sociocultural ramifications of money’s non-fungible
dimensions. I looked at a small association of homestay tourism
entrepreneurs in the Colca Valley community of Yanque, a group of four
families, in which profits, costs, and customers are sometimes shared as
a collective. At the same time, I have been longitudinally analyzing
the use of big bills as part of one rural household’s long-term savings
practices. I found similar results in these sites. The tourism business
cooperative works in a way that the profits and development project
investments it receives often come in the form of unwieldy cash
denominations, which means that association members rarely, if ever,
equally possess the same actual amount of money in a given moment, even
though the organization technically shares its profits. In order to do
so, the cooperative’s president must make an “activation purchase,”
using a big bill to buy a small thing in order to transform the profit
into a more fungible, division-friendly pile of cash units. This almost
compulsory purchase, meant to keep that large cash unit moving, directly
connects the association to the broader local economy, stimulating the
economy through its consistent supply of purchases (however small). The
association also presents a site of longer-term collateralized profit
holding, in which relationships and alignments within the group are
constantly reinforced by the fact that somebody is owed and somebody
owes all of the time.

If the first two case studies reveal that big bills clearly
mediate social relations, the household I have been following sheds more light
on how large cash denominations help to organize savings practices. This
household consists mainly of an elderly couple, the two family members who
actually live in the house. Their resources also often extend to the larger
local family of adult children and grandchildren, many of whom are their
neighbors. Big bills, here, have tended to become long-term savings and value
storage devices. This became clear one day when the couple sold some 400-soles of
alpaca wool: they told me that the four 100-sol bills would be safely stored until
the time came to make a major repair to the house or a large community expense,
such as access to the irrigation system for their farmland. The bigger the
bill, the better hidden it tends to be. These big bills tend to be used as a
kind of portable savings box, storing deactivated latent value, kept in safe
hiding spots in the home. As value storage tools, big bills orient a family in
space by structuring its members’ obligations and investments in the broader
community, and also in time as a long-term savings device, by helping that couple
configure its relationship to the future, imagine the most significant
expenditures they will face in the coming years, and plan the wealth and
resources they will pass on to their children.

The Chivay market. Photo by author.

Together, these sites help us begin to answer important
questions about the everyday practices that surround the usage of money. How
mobile is cash? Are big, unwieldy cash denominations like the 50 or 100-sol
bill uniquely mobile, or uniquely stationary, in rural market centers like
Andean Peru’s Chivay? In this past year’s IMTFI conference, Scott Mainwaring
pointed out that the use of big bills in Colca suggests a concept of cash “heaviness.”
There, small coins (especially the 1-sol and 5-sol piece) are the most desirable
units. They make market transactions and small purchases easy. They are light.
They move quickly. In contrast, the much “heavier” big bills do very different
things. They present unwelcome moments and challenges that force vendors and
entrepreneurs to draw on a limited store of social capital. They keep value in
one place. They move either very slowly or very quickly. Both kinds of cash
units hook actors up to what Viviana Zelizer calls broader “circuits of
commerce” (2011), but each lays out a different pathway into those circuits.

So, thinking about the rich social dimensions of ordinary,
everyday cash use at the micro level suggests that fungibility is not an
automatic function of money, but money’s goal.
Fungibility is something that must be achieved.
Cash denominations can perhaps be imagined as falling on a fungibility
spectrum, ranging from “immediately fungible” on one end, to “fungible through
extensive intersubjective mediation” on the other. The many intermediate steps
one often needs to take to achieve money’s fungibility in Colca are socially
significant, culturally generative, and ethnographically revealing.

The implications of this idea also go beyond cash exchanges,
illuminating some of the key puzzles of mobile money technology and the
essential questions surrounding the idea of alternative currencies that
preoccupies the IMTFI. However mobile it may be, money is not purely liquid.
The social and political structures surrounding money, always a partially liquid medium, reveal a bigger
picture of the contexts of financial inclusion and exclusion in which that
money comes to be at work. They also offer an avenue for broadening the reach, and deepening the impact, of development interventions engaged in the effort to
stimulate local economies to be more equal and more just. As my investigation
has illustrated, those initially unwelcome transactions that lead to
hesitation, conversation, and the use of social ties to lubricate what will
always be an imperfect medium of exchange have much to tell us about how money
comes to be at work in everyday decisions about what is important.

Monday, November 24, 2014

In a December post on the IMTFI blog, Dr. Liz Losh, a UCSD-based
media scholar who live blogged IMTFI’s 2013 Conference, referred to the
“inherently unwelcome nature” of my research experiments for exploring cash use
in an Andean market town. Why might this research have been so unwelcome, at
least at first? As part of my broader investigation into how development
projects have become engaged in stimulating the cultivation of indigenous
identity and putting that identity to work toward creating more economic
vibrancy in Andean Peru, I tried to get a better sense of what development actually
means at the level of cash changing hands. For my project, that meant repeated attempts
to purchase relatively inexpensive items—avocado sandwiches, vegetables, socks,
and other wares being sold in the Chivay market—with large cash bills, namely,
50 and 100-sol notes (about $17.50 and $35, respectively).

I set vendors on this potentially annoying task to find out
how fungible cash really is in practice. Of course, in theory, money is fungible:
any five dollars is mutually interchangeable with any other five dollars, and
the same goes for one-hundred soles, two-thousand rupees, and any other money amount.
Conceptually, it does not matter what notes or denominations or media might be
used to compose that particular amount of value. That’s one of the reasons why money
has been so important throughout modern history. As a medium of exchange, money
has lubricated countless economic transactions. It has long been seen as a
technology that eliminated the cumbersomeness of barter. And much more
recently, money has taken on even more liquid forms, from credit to today’s
mobile money platforms, a core interest of IMTFI. Because of this liquidity, as
social theorists have long argued, economic interaction has become so seamless
that it has almost completely ceased to be something social.

The central market of Chivay. Photo by author.

Yet if buying things with money were really so easy, why
would my research experiments be so unwelcome? If cash use strips the economic interaction
of its social component, why did my annoying attempts to purchase small items
with burdensome big bills find relief in vendors’ social ties?

This research attends to the non-fungible dimensions of
those big bills. Based on what I have found, I argue that in Colca big bills
often cannot be spent without the mediation of certain social relations. In
other words, a bill’s denomination,
or the unit of value it designates (for example, 10 soles, 20 soles, or 50
soles), is sometimes a structural obstacle to cash fungibility: a 50-sol bill
can’t always be used to buy a 3-sol bag of tomatoes, and even if it can, the
exchange can’t happen immediately if the vendor does not have the right amount
of change to return to the buyer. And as a structural obstacle, denomination actually
ends up coloring market exchanges, making them more human, more intimate, and
even more political than standard social scientific approaches to exchange
would have us imagine. This research builds on a number of recent
anthropological studies—notably work by Jessica Cattelino (2009), Julie Chu
(2010), Bill Maurer (2005), as well as an upcoming collaboration with institute
affiliates Anthony Pickles, Vivian Dzokoto, and Taylor Nelms—suggesting that
exchanges of money could be key moments of forging social ties, ordinary
self-making, cultural value creation, and articulating a broader political orientation.

When I would give a 100-sol note for a 3-sol item to one of
the market vendors I have been following, I set for them a temporarily
unpleasant task—making change—that was both time-intensive and entailed drawing
on one’s ties and social networks within the market. They would, in rare
moments, tell me that they could not make change, preventing the transaction (a
process that can lead, in the aggregate, to significant loss, as Beaman,
Magruder, and Robinson [2014] pointed out in a study of Kenyan market vendors).
Usually, though, to complete the sale, vendors would initiate the process of
creating change in one of two ways. If they had the smaller denominations on
hand, they would simply put the change together themselves. More often, though,
they would run to a market neighbor or nearby friend to ask if they could sencillar—a Spanish word that means “to
simplify” but idiomatically also means “to make small change” (or sencillo)—their large bill.

Peru's 100-sol bill. Photo by author.

One morning, I attempted to purchase two small avocado
sandwiches from Reina, one of the breakfast cart vendors I had been following.
She was able to make change, but saw my use of a 100-sol bill as an opportunity
to urge me to purchase more, so that the change-making process would be
slightly less burdensome for her. Hesitating before closing the exchange, she
asked, “¿Dos no más?” “Just two?” Here,
the large bill afforded a chance for salesmanship. She wanted me to sweeten the
deal, making clear the social element of the exchange actually made it a more
profitable one. Brígida, another vendor who tends to ask a small selection of
friends for help making change, told me that large cash denominations were like
any new tool. People simply had to learn how to use them.

So, as a structural obstacle, denomination becomes
fungibility’s “potentializing limit,” as Justin Richland puts it (2011). The
vendor’s need to figure out how to make change opens up what I have noticed is
a productive moment of hesitation. The customer may also hesitate, deciding not
only whether to buy something and what to buy, but also, what configuration of
coins and bills she or he will use to pay for it, considering the cash she or he
will have later that day. These moments of hesitation allow for many parallel
interactions to happen: casual conversation that enables customer and vendor to
strengthen their alliance, which could play a role in fostering customer
loyalty; a moment in which one of the actors is waiting on the other, allowing
the vendor to complete another sale; or a pause in which the vendor or customer
can observe what else is going on by the town square, and tune in to the
broader public culture. Of course, moments of hesitation can also cause harm,
bringing about distraction that can leave a vendor or customer vulnerable to
robbery (something very rare in Chivay) or miscounting.

Yet overall, I found that the interactional moments afforded
by the need to economically “activate” the value of large bills by making
change, however initially annoying, tended to create and reinforce
relationships between customer and vendor, between a vendor and colleagues in
the market, and between market actors and the larger public of the market town.

Thursday, November 20, 2014

Out with the old, in with the new?
When it comes to new technologies, it’s easy to make the argument, “Out with the old; in with the new!” Well, in Kenya, that’s not quite true. The trend one sees is an increase of new mobile money networks and technologies to help complement the traditional microfinance institutions and banks. The ‘new’ usually comes with new products or services, and Kenya has had its share. M-Shwari is one of those ‘newer’ mobile-based services offered to M-Pesa customers, especially small-to-medium-sized informal businesses—or the ‘Jua Kali’ (‘hot sun’ in Swahili) sector as it’s called in Kenya. Launched in November 2012 by Safaricom, Vodafone, and Commercial Bank of Africa, M-Shwari is a paperless form of financial transaction that offers individuals the ability to save and borrow with their phones.

What was the research about?
The three researchers—Dr. Jane Mutinda (Kenyatta University, Kenya), Dr. Ndunge Kiiti (Houghton College, New York), and Professor Charles Nzioka (University of Nairobi, Kenya)—set out to discover the uses and impact of M-Shwari as a financial inclusion banking product in urban and rural areas of Kenya. We visited eight counties in four regions of Kenya—Western (Kisumu & Bondo); Coastal (Mombasa Town & Kaloleni); Nairobi (Westlands and Eastlands); and Eastern (Machakos & Embu). In each region, the first location listed represents the ‘urban’-based focus and the second represents the more ‘rural.’ The Micro and Small Enterprises Authority (MSEA) were our hosts in each of the counties. With an introductory letter in hand from the Director of MSEA Headquarters in Nairobi, county-level coordinator facilitated our access to the SME owners, and were each interviewed for the research as well.

In the end, what’s the value added?
There are numerous value propositions for this type of research. First, there is limited existing information and data on the use of M-Shwari in Kenya. Second, the understanding of this product, from the demand perspective—especially the Jua Kali sector—will provide insight for service providers, policymakers, and other institutions. The Jua Kali sector is a key part of economic growth in Kenya. Thus, mobile money technology that improves this sector’s business opportunities for both savings and loans will impact Kenya’s economic growth.

Piloting the research instruments with craft artisans inEmbakasi, Nairobi (Photo by Ndunge Kiiti)

What did the research entail?
A central component of this research was a training program for the fifteen research assistants who were recruited from several universities and programs in Kenya to help us with the field work. The students represented all the ethnic backgrounds of the eight counties where we were collecting data. The training curriculum included: mixed methodologies–qualitative (in-depth and focus group interviews) and quantitative; instrument review; field practice and piloting of instruments; and transcription. The workshop was facilitated in partnership with Dr. Monique Hennink of Emory University’s School of Public Health in Atlanta. One participant had this to say about the training: “Overall the content and the teaching method as well as the field practice were highly valuable. The notes given were also very appropriate.” The training paid off. The students were well-prepared in the data collection process, demonstrating impressive interviewing and facilitation skills with great cultural sensitivity and appropriateness. The process was also a great opportunity to reinforce IMTFI’s mission of building the capacity of individuals and institutions within their own countries so that they are capable of carrying out relevant research that informs policies and practices to ensure sustainable development.

What did we learn while in the field?

Interviewing research respondents at their place of work(Photo by Ndunge Kiiti)

Well … a lot. But we’ll share a couple of lessons learned that were reinforced here. First, from the training aspect, it’s critical to have research assistants that speak the necessary vernacular and the national language representing the populations where data will be collected. Additionally, using the methodologies in role plays as part of the training is essential before doing the pilot. From the actual data collection process, when working with the Jua Kali sector time is very important. Taking them away from their businesses often means income lost. Thus, even for research, it is important to meet them where they are and sometimes that means doing interviews at their businesses.

Were there any new discoveries? What do we know now that we didn’t before?
The research is still ongoing. We have collected all of the data, and currently all of the focus group discussions and in-depth interviews are being transcribed. Based on the questions that we asked, there will be insights about: the type of marketing approach that best communicates M-Shwari; patterns of product usage in terms of loans and savings; opportunities and challenges associated with the product; and dimensions of inclusion and exclusion in the process.

What are the next steps?
Some of the more immediate next steps include: completing transcription of the qualitative data; entering and analyzing the quantitative data; data analysis, synthesis, and writing up of findings; workshop for dissemination of findings to policymakers, service providers, the Jua Kali sector, researchers, various institutions, government, and other stakeholders; reports, presentations, and publications.

How will the research be disseminated?
Various avenues for dissemination include: stakeholder workshop, conference presentations, video and publications (reports and articles); etc.

We are excited about our research so far, and look forward to sharing our findings in the future.

Monday, November 17, 2014

There is a general acceptance that the growth of rural
financial institutions in Indonesia will increase the access people have to formal banking.
However, the growth of these rural financial institutions is developing alongside a (long-standing) informal
lending system: the patron-client relationship. We examined to what degree this informal patron-client lending system persists. We found that these patron-client relationships still exist even in the areas with
intensive rural-financial institutions in Makassar, Indonesia.From the sub-regencies of Pacinongan,
Panakkukang, and Panampu, we select 6 patron-client relationships in different businesses including sea cucumber fish, game centers, calfskin crackers, land plot sales,
garages, and fried shallots. The sea cucumber fish business has lasted for two
generations, while the others are one generation old. The game center is new
and is run by students. All are similar in the informality of their labor
relations (recruitment, types of duties, hours of work, and wages). In general,
there is a fixed wage directly related to the main job or revenue, with some
additional wages related to additional tasks (e.g. housework). As Ahimsa-Putra
(2007) noted, the presence of additional transactions is observed in all of these
patron-client relationships. Recruitments could be based on: kinship, the
origin of the business owner, recommendation by an existing worker,
neighborhood proximity, or friendship.

Daeng Munding with son, nephew, and
friend’s son
working at calfskin cracking business.

The patronage relationship begins with worker recruitment.
The recommendation of existing workers, family ties, and friendship enables the
business owner to connect with workers. Recruitment proceeds depending on the
needs of the employer. It could be more swift and direct if new workers are
found via family ties and the recommendations of existing workers. Or, it could
take longer and require more processing because the business owner needs to
ensure that the new worker will not disrupt the existing working environment. The
importance of a workforce’s harmony is attested to by one game center worker’s statement
that the joyfulness of working is the most important reason why they stay.

One of the cucumber sea fish workers told us that when they make
their trip from Central Sulawesi to work on Kodingareng Island in South
Sulawesi, they usually bring family members with them as new recruits. With
permission from the employer, those family members are recruited to work as
divers. Usually, it costs the employer around 10 million Rupiah (about $818USD) to hire a new
recruit, which covers their transport and the living costs of the family back
in Central Sulawesi. Even though this initial money is thought of as a loan,
the worker never actually pays off the debt, making it harder for the employee
to leave.

Since the workers also live with the business owner and the
main activities on the job do not absorb all of the workers’ time, they must be
willing to take on a variety of unspecified tasks. However, the owner does not
just add to the worker's duty, but also offers in-kind rewards such as shelter,
food, holidays, and paying for other unexpected expenses. This helps to develop
a mutual dependency between the worker and the business owner. The garage and the fried shallot businesses are an
exception to this pattern, as the workers are the neighbors and do not stay
with the business owner. Still, additional duties to the main labor tasks (or “additional
transactions”; Ahimsa 2007) are observed in these businesses.

Daeng So’na working at her fried shallot business

with her neighbor.

The inexact working hours, and the closeness of habitation,
build up trust between the business owner and the worker. In addition, the
closeness of their habitation and the informality of their contract make the
relation less like an employee-employer relation, and more like a family one.
Even in the case of exact job descriptions, the informality still endures in
the rewards/payment aspect of the relationship. Such an informal relationship
between the workers and the business owner can also be observed in the case of
young businesses. Even though their connections might not be as old and living
as close, the kind of duties they do are not always related to the main
business.

Nahar, the game center owner, said that the business does
not have a fixed work schedule. It depends on who has spare time, as they are
university students. There is no fixed salary, as it depends solely on the
everyday rental income of games. Yet, he told us, “In spite of the uncertain
income they get everyday, they do enjoy working in this game center because of
their friendship and they are willing to offer any help to me whenever I need
them inside or outside of the games center.”

In all of our selected cases, the business owner is a resource
that helps solve the financial needs of the worker. As with the informality of the
working relationship, lending and borrowing are also carried out
informally. Even though the rotating savings association, local cooperatives,
and banks are familiar to them, the workers prioritize the employer as the
primary lender from which to borrow. It seems that the flexibility and mutual aid
attached to the loan and its repayment are the key reasons for those
preferences.

In the land plot selling business we were told that the
basic salaries for the marketers is a weekly payment between 200.000-250.000
Rupiahs (about $16-$20USD), plus daily pocket money of either 20.000, 30.000 or 35.000 Rupiahs (about $1.60, $2.45, $2.86 USD). As
a bonus, the marketer earns a fee of around 2.500.000 Rupiahs ($204.50USD), if the buyers
pay in cash, and around 1.000.000 Rupiahs ($81USD) if the buyers pay in periodic
installments. While the workers stay in their boss’s house, she provides for
daily expenses (food, cigarettes, etc.). Doubtlessly, these workers also do
housework. The informality also persists in cases where workers need extra
money. Borrowing is always to the boss. It is not clear how the marketers pay her
back, but we gather from our investigation that she acts almost like a mother
to them.

In the fried shallot business and the game center, banks are used for saving and for transferring payment. When the game center business grows, the owners plan to use workers who have more formal contracts. Thus, when the informality and mutual aid motives fade, the likelihood of using formal banking institutions increases.

Wednesday, November 12, 2014

It’s been a busy year for financial inclusion, mobile money, and IMTFI. Our latest newsletter has a wrap-up on all our work on money, technology, and financial inclusion. With 21 new projects funded in 2014, we now have a total of 123 projects in 41 countries, with support for over 160 researchers since our founding in 2008. Our researchers have published new books, tons of articles and reports, and are exploring new formats for the dissemination of their research results as well as for the provision of financial education. Take a look at our new executive summary of our research to date on gender and financial inclusion, "Snapshots of Gender and Financial Inclusion". We were also recognized by The Guardian as one of the top ten financial inclusion Twitter streams—so, if you’re not doing so already, please follow us!

Friday, November 7, 2014

Michael Joyce—Mobile Money Policy Advisor with TNP2K—reported
this week about Indonesia’s launch of G2P e-payments, in what is being heralded
as one of the country’s largest pushes yet toward financial inclusion. We look
forward to Michael sharing his insights with us at the IMTFI Sixth AnnualConference in December.

To read more about these exciting new developments, click
here for Michael’s post at Mobile Money Asia.